PSA: Cuisinart Recalls 8 Million Food Processor Blades

bladerecallIn case you missed it during the holiday rush, Cuisinart has issued a recall of over 8 million food processor blades in the US and Canada. This covers a huge chunk of their machines sold in the last 20 years, including the one in my kitchen. The riveted blades can crack over time and leave small metal pieces in your food (yikes!).

This recall involves the riveted blades in Cuisinart food processors with model numbers that begin with the following: CFP-9, CFP-11, DFP-7, DFP-11, DFP-14, DLC-5, DLC-7, DLC-8, DLC-10, DLC-XP, DLC-2007, DLC-2009, DLC-2011, DLC-2014, DLC-3011, DLC-3014, EV-7, EV-10, EV-11, EV-14, KFP-7 and MP-14. The model number is located on the bottom of the food processor. The blades have four rivets and are silver-colored stainless steel and have a beige plastic center hub. Only food processors with four rivets in the blades are included in this recall. Cuisinart is printed on the front and on the bottom of the food processors.

Cuisinart will send you a free replacement blade if you contact them through their website at recall.cuisinart.com or call them at 877-339-2534 from 7am to 11pm ET Monday through Friday and from 9am to 5pm ET Saturday and Sunday. They have not offered anything further such as partial refunds or reimbursements.

I submitted my information online and received a confirmation e-mail. They were very vague with how long it would take to send the new blades.

Thank you so much for registering to receive your free Cuisinart replacement blade. Our blades are fabricated using precise manufacturing processes, which of course means, that they take some time to produce. We are producing new blades as rapidly as possible to meet the demand resulting from this replacement program.

When your blade is about to be shipped, we will send you an email so you can anticipate when it will arrive to the address you indicated on your replacement blade registration. In the meantime, you are able to use all other cutting implements and accessories that may have come with your Cuisinart food processor.

Vanguard Managed Account Program (VMAP) Review – Cost vs. Benefits

savebuttonbankVanguard is the one of the biggest providers of defined contribution (DC) plans like 401(k) and 403(b) plans, with more than 3.9 million participants. An optional service they provide for these DC plans is managed account advice, where you pay them an asset-based fee and you cede all portfolio control to them. Vanguard Managed Account Program (VMAP) serves as a fiduciary that sets asset allocations, chooses investments, and monitors/rebalances portfolios on a continuing basis. Fees typically begin at 0.40% on the first $100,000 in assets under management.

Vanguard published a research paper on the before-and-after results from actual participants called The value of managed account advice [pdf].

Even if you aren’t considering paying for such a service, I figured there would be some worthwhile takeaways from their results. Here are my condensed notes from reading their paper.

Reallocation of company stock. About 12% of participants initially had a concentrated position of 20% or more in employer stock. Holding too much stock in your employer is generally understood to be too risky, so VMAP fixes that. The average allocation to company stock fell from 46% to 4% as a result of managed account advice. This group was probably impacted the most by professional advice.

Personalized advice. Not only do you simply indicate an expected retirement age and desired level of risk, but you can add outside assets to the overall asset allocation evaluation. 35% of all VMAP participants personalized the service in some manner.

Forcing you to make savings rate decision. When you sit down and start this service, you have to talk about your goals and see some projected numbers. Then you must make a decision as to your savings rate. Overall, people saved more once faced with this situation. Specifically, 1/3rd of participants increased their savings rates, 7% decreased them, and the remaining majority maintained contribution rates at the same level. See chart below:

vmap_savings

More appropriate asset allocation. In terms of asset allocation, VMAP made things more appropriate and efficient in relation to the need and ability to take risk. Some people got more equity exposure, some people got less. On average, people were told to hold less employer stock, less cash, and more international stocks. See chart below:

vmap_aa

Net effect on retirement wealth. Let see. On average, VMAP participants saved more money. On average, expected returns on VMAP-advised portfolio rose. On average, expense ratios on VMAP-advised portfolio were reduced by 0.06%. But everyone also paid advisory fees. What happens when you take all the factors together? In their own words:

To summarize the interplay of these effects, we used the change in participants’ projected ten-year real retirement wealth as a benchmark for evaluating advice. This allowed us to observe the true effect of managed accounts, independent of the participant’s starting account balance or asset allocation.

On average, managed account participants experienced a relative increase of 15% in projected retirement wealth over 10 years. I’m a little disappointed in “projected” wealth increase vs. actual wealth increase, but I think that’s the best they could do with their limited data set. In order to better see how this works, they broke things into ten equal groups, or deciles, based on the change in retirement wealth. This chart includes the 88% of participants that didn’t have a huge chunk of company stock to start with.

vmap_deciles

As you can see, the bottom decile is mostly affected by the fact that they simply chose to save less money (lower annual contribution rate) and they lowered their stock exposure (lower expected real return). I can only guess that these folks needed to lower their risk levels to a more appropriate level. The top decile both chose to save more money and increased their stock exposure.

Summary. Each of the factors listed above could all be converted to standard advice, i.e. “Things an Investor Should Do”. You should make sure not to hold too much company stock. You should assess your situation, and increase your savings rate if needed. You should make sure your asset allocation is appropriate for your age and risk requirements. Yes, a DIY investor could certainly do these things for themselves. But have you? Will you?

This part is purely my opinion, but how about a general rule, if you haven’t done these things in the last 3 years, perhaps paying for advice may just be worth it? For example, if you’re holding more than 30% of your portfolio in company stock, and haven’t gotten rid of it in the last 3 years, maybe you need someone to do it for you.

Berkshire Hathaway Official Reading List 2015: Approved Books by Buffett and Munger

tapdaceAmong the many booths at Berkshire Hathaway’s 2015 Annual Meeting was one run by a local bookstore. Each year, BRK approves a list of books, many of which have been mentioned in shareholder letters or other speeches by Warren Buffett and/or Charlie Munger. I always see media articles referring to this list (ex. 11 Picks from Warren Buffett’s Bookshelf), but here is the entire official list from The Bookworm.

“I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business. I do it because I like this kind of life.” – Warren Buffett

Besides the well-known Buffett biographies and classic investing books, it still manages to include several investing books I’d never heard of before, as well as some intriguing non-investing books by Buffett’s siblings and children. There is even a comic book and a separate section for kids. Here’s the Amazon-linkified list, sorted by category in alphabetical order.

About Warren Buffett

About Charlie Munger

On Investing

General Interest

Family and Children’s Interests

Big Picture Financial Advice from Jonathan Clements

clementsbookHere is some “big picture” financial advice from author and columnist Jonathan Clements. I’d like to collect enough of these tips from notable people and make a compilation post.

Clements recently wrote his last column “How to Live a Happier Financial Life” for the Wall Street Journal Sunday (which is ending publication), but he’ll still be writing for the main Wall Street Journal (on Saturdays). I’ll just paraphrase the bullet points below; read the full article for the details.

  • The biggest waste of time is commuting.
  • The best investment attribute to have is humility.
  • The biggest key to financial success is cheap housing.
  • The best way to spend money is to buy experiences.
  • Your top financial goal should be to have the ability to do fulfilling work, as opposed to working solely for a paycheck.

I guess he’s a sentimental guy because he also wrote a “last column” called “Parting Shot: What I Learned From Writing 1,008 Columns” in 2008 when he left the Wall Street Journal to join Citigroup (before coming back). Highlights below; read full article for details.

The question – What is the reason for all this saving and investing?

  • If you have money, you’ll worry less about it.
  • Money can give you the freedom to pursue your passions.
  • Money can buy you time with friends and family.

I checked and both articles weren’t behind a paywall at the time of writing, but that may change in the future.

Season’s Greetings!

fam2014a

Thank you very much for reading My Money Blog this year. It’s now been over 10 years… where has the time gone! I still look forward to learning and sharing something new every day. Here’s hoping that you are happy, healthy, and moving ever closer toward your goals.

Remember that you can follow updates via RSS feed, daily e-mail subscription, following me on Twitter, or liking my Facebook page.

New Site Design

Just a quick note that I finally updated this site’s design after many, many years. The primary goal of this redesign was to improve usability and readability across modern computer screens, which now span from 30″ widescreen monsters to 3.5″ smartphones. I’m also trying to improve navigation so that readers can easily find the more timeless posts amidst the many other time-sensitive posts. I still have a lot of work to do by going through my archives and cleaning things up.

Please let me know if anything is broken or just what you think of it. Thanks!

MyMoneyBlog.com Interview with Mint

Money management website Mint.com recently did a brief interview with me, although we did cover a variety of topics. Here’s the link:

Personal Finance Interview with Jonathan Ping on Money Management

Sick Leave

I’ve been getting my butt kicked by a bout of food poisoning, so posting will be light this week. Fever, chills, sweats, and I haven’t been able to keep down any solid food in over 48 hours. Blech.

What Does 200 Calories Cost? A Visual Guide (Economics of Obesity)

WiseGeek has an interesting article on What Does 200 Calories Look Like?, where it photographs the portions of several foods that equal 200 calories and sorts them by weight. Here’s broccoli next to peanut butter on the same plate:

200 Calories Of Broccoli and Peanut Butter: WiseGeek.com

I thought it would be neat to extend this idea and see what 200 calories costs. So I extended my usual grocery trip by finding out the price per weight for each of the food items they selected. The results are below, grouped by price per 200 calories. Image credits go to WiseGeek.com. Please go there for the full versions, these are just thumbnails for reference.

Cost of 200 Calories: Less than 50 cents
image credit: wisegeek.com
Canola Oil
$0.07
image credit: wisegeek.com
Wheat flour
$0.07
image credit: wisegeek.com
Brown Sugar
$0.10
image credit: wisegeek.com
Peanut Butter
$0.17
image credit: wisegeek.com
Cornmeal
$0.20
image credit: wisegeek.com
Uncooked Pasta
$0.21
image credit: wisegeek.com
Glazed Donut
$0.23
image credit: wisegeek.com
Butter
$0.24
image credit: wisegeek.com
Salted Pretzels
$0.24
image credit: wisegeek.com
Wheat Dinner Rolls
$0.23
image credit: wisegeek.com
French Sandwich Roll
$0.24
image credit: wisegeek.com
Smarties Candy
$0.24

[Read more…]

Why You Should Make a New Year’s Resolution

If you’re like me, you may wonder if a New Year’s resolution is even worth the bother. By chance, I was listening to an NPR interview today with a Dr. John Norcross, a psychology professor who decided to study this phenomenon. Listen, download the mp3, or read the transcript at NPR.org. Here are the highlights:

According to Norcross, 40-50% of people make New Year’s resolutions each year. How did they do when studied over time?

Dr. NORCROSS: In two of our longitudinal studies, 40 to 46 percent of New Year’s resolvers will be successful at six months. So, the half empty is it’s true, most people fail. But 40 to 46 percent is pretty impressive. […]

You know, I was tired of people saying resolutions never succeed, we shouldn’t even try them. And I said, well, wait a minute, these are life-sustaining behaviors. What’s the alternative? So, the alternative was to track people starting before January 1st with the same behavioral goals, with the same motivation to stop or to take the resolutions but who just weren’t going to do anything then. And that’s – and only four percent of them were successful at six months. So you go from four percent, all the way up to 44, 46 percent by taking a New Year’s resolution seriously and trying to do something about it.

10 times the success rate! So people who made resolutions had a 40% success rate as compared to 4% from those who had the same motivations but didn’t set resolutions. Definitely encouragement for would-be resolvers. More goods news is that the studies found that slips or short lapses in the resolution did not always lead to failure. Many people used the lapses to strengthen their determination.

How to set a good resolution. Norcross recommends setting attainable, realistic, and measurable goals. So lose 10 pounds instead of 50 pounds or “a lot of weight”. Save $100 more from each paycheck vs. saving an extra $15,000 somehow during the year. Grandiose goals set you up for failure, as you need to have inner confidence that the specific goal you set is achievable. This agrees with the popular SMART mnemonic that says that goals should be Specific, Measurable, Attainable, Relevant and Time-sensitive.

So, resolutions are good, especially if you do them right. However, you may want to keep number of resolutions to a minimum:

FLATOW: So you do one thing at a time, you know? Don’t say, I’m going to diet and quit smoking at the same time, because you’ll never get them both done.

Dr. NORCROSS: Well, there’s some interesting research on that. And that is, it depends how much time and commitment you have. If the two resolutions are related, then it may make sense to do it together. For example, losing weight and increasing exercise – most people see those things as going together. But if there are two very different resolutions, you may just be overwhelmed with the amount of time and energy that they call for. So, we ask people never more than two. If they’re related, two is great. Otherwise, just do one at a time.

Link Digest: Mixing Work & Passion, Invest in Memories, Stable Value Fund Warning, and More

Here are some more links worthy of sharing:

The Overjustification Effect
A smorgasbord of behavioral psychology that questions the idea that there is nothing better in the world than getting paid to do what you love. This is a very complicated topic but the article makes some good observations.

Memory as a Consumer Durable (Atlantic)
Another twist on the whole “buy experiences, not things” theory. What if you treated a memory as “consumer durable” good much like refrigerators, furniture, or a car? In similar ways, they provide constant satisfaction and/or pleasure, and they last a very long time. In that case, should we acquire them while we’re young so we can enjoy them the rest of our lives?

Stable value 2.0, fewer investor guarantees (Reuters)
If you own a stable value fund in your retirement plan, you should check to see if changes were made to any of its principal guarantees.

The 401(k): Americans ‘just not prepared’ to manage their own retirement funds (WaPo)
401k were designed to be a supplemental account to pensions, but now they are a replacement. If you know what you’re doing, it’s good, and it’s nice because you can take the money with you across jobs. But the total account balances are nowhere near what people need to retire as a whole. Maybe we need something else.

“If the 401(k) is supposed to be the primary retirement vehicle for the average American worker, then it needs to be consistent with the information and financial ability of the average American worker, who is just not prepared to manage funds like that over the course of a lifetime.”

GMO 2012 1st Quarter Letter
The most recent letter from Grantham talks some sense about why most managers can’t afford to have the proper long-term mentality for market-beating returns.

…ignoring the volatile up-and-down market moves and attempting to focus on the slower burning long-term reality is simply too dangerous in career terms. Missing a big move, however unjustified it may be by fundamentals, is to take a very high risk of being fired. Career risk and the resulting herding it creates are likely to always dominate investing.

CarrierCompare: The iPhone app your carrier doesn’t want you to see (CNN)
An iPhone app that takes data (signal strength, response time and speed) from users and analyzes it together to find which carriers have the best service and coverage for any given area. (Update: Apple has since removed it from the App Store.)

Link Digest: Paying For Status, Nutella Class Action, Social Security Planning, Being Your Own Bank, and More

The Perils of Paying for Status
An article in Scientific American magazine about our desire to feel powerful and achieve social status affects our decision-making. If you’re feeling insecure, you’re more likely to overpay for products and/or buy more stuff than you need. Simply knowing this common weakness may help you spend more wisely in the future.

Nutella Class Action Lawsuit
Nutella calls itself healthy, when in fact the first two ingredients are sugar and vegetable oil (fat). Class action lawsuit ensues. Lawyers get rich. Regular folks who bought the stuff can get $20 with a claim, with no proof of purchase required. If you’ve ever bought Nutella spread since 2008, you should check if you’re eligible.

Social Security and Medicare: Proper Planning Pays Off Big
I’m not an expert on this stuff, but this Morningstar article seems to do a pretty good job of summarizing the ways to maximize your Social Security and Medicare benefits and minimizing any penalties.

I Quit My Passion and Took a Boring Job
A guest poster at GetRichSlowly shares his story of quitting a job he loved (teaching high school math) and taking on a job that pays the bills (accountant).

Bestselling book’s financial promises don’t add up
Allan Roth at CBS Moneywatch does a great job debunking a “bestseller” book that is one of many misleading scams that pushes whole life insurance as “infinite banking” or “make your own bank” as a good way to build wealth. It’s a great way to build wealth, but only when you’re the one selling the whole life insurance!

What Does the Prudent Investor Do Now?
WSJ article by author Burton Malkiel about his outlook on stocks and bonds. If you can’t read it directly, try here and click on the first result.

In today’s environment, the minimization of investment fees is more important than ever. A 1% investment management fee may appear to be very low when measured against assets. But when measured against a 7% equity return, that fee represents more than 14% of the return. Against a 2% dividend yield, the fee absorbs one half of the dividend income.

GMO Quarterly Letter Q4 2011 (pdf)
Another letter to investors that I have come to enjoy reading each quarter. Jeremy Grantham gives some good investment advice, and also some market opinions that may or may not be right. I don’t necessarily agree myself, but I like his style. Right now he only likes “high quality” US equities, and he hates going long on bond duration to reach for yield.